Survey of Greek SMEs (January 2016)

​Under the pressure of political uncertainty and capital controls, SMEs recorded a significant decline in sales in Q3.2015. Specifically, according to a survey among a sample of 1,200 enterprises, the decline was 15 per cent in Q3.2015 yoy, compared with 4 per cent in Q2.2015 (reaching 23 per cent and 10 per cent respectively for micro enterprises). Notably, the capital controls seem to have had a greater impact on SMEs rather than on large enterprises, as the gap in the rate of decline in sales amounted to 7.2 percentage points in Q3.2015 (15 per cent for SMEs compared with 7.8 per cent for large enterprises).

As regards the business climate, the capital controls are reflected in NBG's Business Confidence Index for SMEs, which deteriorated by 21 points in the second semester of 2015 yoy, back to the levels of H2.2013. The deterioration of the Confidence Index largely reflects the operating burden on SMEs as a result of the capital controls, mainly regarding:

    • supplies of raw materials (39 per cent of the sector faces severe problems, and 39 per cent some problems),
    • cross-border services (35 per cent of the sector faces severe problems, and 27 per cent some problems) and
    • collection of receivables (31 per cent of the sector faces severe problems, and 51 per cent some problems).

SMEs' reaction to capital controls was moderate due to the fact that more than 1/2 of the segment stated that they were prepared for such an eventuality; they had kept cash outside the banking system (21 per cent of them to a sufficient degree and 36 per cent to some extent). In addition, concerning trade and manufacturing (which account for 70 per cent of SMEs), there is a second line of defense against capital controls: holding of inventories. In view of the above, the share of enterprises that have either adequate cash or sufficient inventories exceeds 80 per cent.

Accordingly, as the relative resilience of the business sector in the face of capital controls arises in part from a finite level of cash resources outside the banking system (and secondarily from inventories), a swift end to such controls is crucial if their impact is to be kept at current – relatively manageable – levels.

SMEs appear to anticipate a swift end to capital controls, as less than ½ of the segment states that it has made a change in its medium-term strategy because of the capital controls. To illustrate:

    • circa ¼ of SMEs have cancelled investment plans,
    • 22 per cent have reduced their staff,
    • 7 per cent have shut down operations temporarily,
    • just 1 per cent relocated their headquarters abroad.

Capital controls also had two positive impacts on the operating efficiency of the Greek economy: use of e-banking services and POS terminals increased – especially in small enterprises (12 per cent installed POS terminals and 14 per cent began to use e-banking services as a result of the capital controls).

On a sector level, chemicals, IT services and tourism stand out positively, while construction and retail trade appear to be weaker.

Survey of Greek SMEs (January 2016)